Apple reaches iRadio deal with Warner Music, suggesting WWDC launch

Apple struck a licensing deal Sunday with both Warner Music Group and its publishing arm, Warner Chappell, bringing Apple's free Internet radio product that much closer to launching, according to sources familiar with the negotiations.

While that alone could be lucrative because of Apple's sheer size -- and Apple plans eventually to roll this service out globally -- the hope for the labels is much bigger because it comes with two other potential revenue sources. Apple has told the music labels that it plans to build out its ad business, including potentially adding audio ads such as those heard on Pandora's free service.

The product, which would be tied to iTunes, would be made for mobile devices. It would contain some features not available on Pandora -- such as the ability to rewind a song from the middle of it, sources say -- and would have a simple button that would let users easily purchase a song. This, too, could be a boon to the labels, which collect roughly 70 percent of every dollar from an iTunes purchases. Currently, there are about 500 million iTunes accounts; Pandora, by contrast, has about 70 million active users.

As for the publishers, sources say that the deal on the table -- and presumably the one signed by Warner Chappell -- gives publishers more than twice the ad share revenue they currently receive from Pandora.